Health reform in need of a fresh start

As a politically diminished head of a minority Labor government,
Julia Gillard
can’t claim a mandate for implementing Labor’s health and hospitals plan launched by former prime minister
Kevin Rudd
in March and, excepting Western Australia, ratified by the Council of Australian Governments in April.

Perhaps she doesn’t want to. When the Governor-General set out Labor’s priorities in opening Parliament last week, health was well down the list. Had he still been PM, Rudd would not have given his health and hospitals reforms one sentence buried mid-speech. Even problem gambling got three.

One reason was the report in The Australian Financial Review that day of a leaked email written by a very senior official in Roxon’s department which, in no less than 42 dot points, revealed that Victoria refuses to sacrifice its superior Kennett-era hospital governance model for Rudd’s National Health and Hospitals Network (NHHN).

This followed a June leak from NSW (almost unreported because of the Labor leadership coup) highlighting risks in that state to mental health, drugs and alcohol services from a NHHN-driven restructure. Despite COAG smiles, clearly there are some unhappy state campers.

Their unhappiness is exacerbated by West Australian Premier
Colin Barnett
having held out without surrendering his state’s sovereignty over hospitals and GST revenue to the commonwealth. Indeed, senior WA government figures can’t believe how much has been thrown at them since April to induce Barnett to sign on.

The other premiers must be watching enviously as Barnett has his funding cake and eats it too.

Rudd, Roxon and now Gillard traded on the NHHN plan being popular just because it is seen as “doing something" about health and hospitals, including presenting their proposed 60 per cent funding share and related GST clawback as a de facto commonwealth takeover of public hospital funding. The election campaign, however, suggests the plan has not captured the popular imagination, and Gillard steered away from promoting what could be seen as the martyred Rudd’s legacy.

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Given its apparent lack of political will, the minority Gillard government will struggle to implement a COAG deal over which Labor states were strongarmed to help federal Labor’s re-election.

The leak to the AFR indicates that Victorian Premier
John Brumby
, having gone into COAG playing Tarzan but getting barely 20¢ in the dollar of what he wanted, is already bolshie. Now, having failed to win Barnett, Brumby or any other state leader, Labor may want to dump or renegotiate the deal.

They can do just that. Contrary to the Commonwealth’s rhetoric the COAG outcome, and therefore the whole foundation of the NHHN, is not set in stone. Without legislation locking them in, the COAG agreement, its carve-up of roles and responsibilities and its GST clawback, are nothing but an informal memorandum of understanding, a declaration of intent rather than a binding inter-governmental contract. Without it being legislatively entrenched, and current public hospital funding arrangements running until 2013, a state could walk away altogether while pocketing the windfall of specific sign-on incentives already budgeted.

Alternately, they could do a Barnett and renegotiate a better outcome from a position of relative strength. Gillard and Roxon might rail against such revolts, but in their current weak position they would be Canute against the tide.

This affects especially the two states facing elections, NSW and Victoria. Their ageing Labor governments have nothing to lose, and as it has no legal force their oppositions aren’t bound to uphold the COAG agreement if they win. In Victoria, where his pre-COAG bravado proved hollow on the day, the leak to the AFR shows Brumby is terrified he has given too much away. If Victoria backslides, other states and territories may follow.

Federal Labor’s NHHN plan got momentum almost entirely thanks to Rudd plunging himself into it heart and soul, using up much political capital in doing so. If Gillard is relatively disengaged on health, Roxon alone is not strong enough to hold the line against restive states, vested interests and empire builders in the federal bureaucracy. Reform inertia will return.

With Rudd’s demise as PM an early opportunity has arisen for COAG to take a deep breath and consider ditching his settlement for a more effective reform agenda. Ideally, this would overcome the enduring political obsession with feeding the public hospital beast that dominates strategic policy debate on health in Australia.

It can promote a genuine continuum of primary, acute and preventive care, better harness the key federal-state and public-private health funding partnerships, and rebuild a trained but ageing health workforce to be young and large enough to serve mid-century needs.

Perhaps COAG might even dare consider the key reform that truly would support needs-based services: a single government health funder.

Whatever happens next, however, without strong prime ministerial leadership in this term any meaningful structural reform of healthcare is unlikely to succeed.